News

The Union Cabinet has approved a major scheme to promote Surface Coal/Lignite Gasification Projects with a financial outlay of ₹37,500 crore.

About the Scheme

• A Central Incentive Scheme aimed at accelerating the adoption of surface coal gasification technology in India.

• It provides financial assistance for converting coal/lignite into Synthesis Gas (Syngas).

• Syngas is further used to manufacture:

  • Methanol

  • Ammonia

  • Urea

  • Synthetic Natural Gas (SNG)

  • Other downstream chemicals and fuels

Ministry

• Implemented by the Ministry of Coal

Aim of the Scheme

Primary Objectives

• Achieve the national target of 100 Million Tonnes (MT) of coal gasification by 2030

• Diversify the use of India’s vast coal reserves

• Reduce dependence on imports of:

  • LNG

  • Urea

  • Ammonia

  • Methanol

  • Natural gas

• Strengthen India’s energy security

• Promote Atmanirbhar Bharat

Key Features of the Scheme

Financial Outlay

• Total allocation: ₹37,500 crore

• Target: Gasification of approximately 75 MT of coal/lignite

Incentive Structure

• Financial assistance capped at 20% of Plant & Machinery cost

• Maximum ₹5,000 crore per project

• Maximum ₹9,000 crore for a single product (except Synthetic Natural Gas and Urea)

• Maximum ₹12,000 crore for a single group across all projects

Selection Process

• Transparent competitive bidding process

• Benchmarking based on:

  • Project cost

  • Output efficiency

Incentive Disbursement

• Incentives released in 4 equal installments

• Linked to completion of specified project milestones

Coal Linkage Support

• Coal linkage tenure extended up to 30 years

• Ensures long-term investment stability

Technology Promotion

• Multiple technologies permitted

• Encouragement for indigenous gasification technologies

Additive Incentives

• Benefits can be combined with:

  • Commercial coal mining incentives

  • Other Central/State government schemes

Significance of the Scheme

Reducing Import Dependence

• India’s import bill for substitutable products like LNG and Urea stood at approximately ₹2.77 lakh crore in FY2025

• Domestic production from coal can significantly reduce imports

Boost to Atmanirbhar Bharat

• Promotes indigenous production of:

  • Fertilisers

  • Fuels

  • Chemicals

Economic Impact

• Expected to generate investments worth ₹2.5–3 lakh crore

• Benefits:

  • Coal-bearing regions

  • Industrial infrastructure development

  • Employment generation

Conclusion

The scheme is a major step towards:

• Energy security

• Import substitution

• Clean coal utilization

• Industrial growth

It supports India’s goals of self-reliance, economic growth, and strategic energy diversification.